It must be in the cultural DNA.

The corporate left brain/right brain conflict is alive and well in Jetstar.

Currently Jetstar is spending on TV advertising their Asian destinations, pushing that they are not just a cut price airline, at the same time they are facing a PR debacle, having left passengers in Penang airport for several days due to mechanical problems with an aircraft. (perhaps they should change their advertising; “an extra 4 days at your expense” not a great idea?)

Gail Kelly at Westpac got it horribly wrong a few weeks before Christmas, raising the banks home mortgage rate beyond the increase in the prime rate, how many advertising dollars did that send down the crapper? Anyone who actually thought about the pricing challenge from a customer perspective would have predicted such an outcome, that the mistake was made by the former CEO of St George whose culture was all about customer care is inexplicable.  Even the vaunted Toyota is struggling with a recall in the US of 9 million cars with sticking accelerators, not a good addition to their market positioning.

The list of companies that sacrifice their long term position to get out of a hole in a crises goes on, and on. The corporate “numbers  groupthink” takes over, no-one states the obvious, but uncomfortable truth that the P&L needs to take a short term hit for the benefit of the long term.

Very occasionally, someone does it right. The classic is J&J’s recall of Tylenol in 1982, and subsequent leadership in introducing tamper evident packaging. Short term cost was huge, but the long term position was enhanced enormously. Arnotts in Australia had a similar experience in 1993, and came out of it smelling like roses.

Why do most businesses continue to make the same mistake when faced with a crisis, a short term focused response?

 My conclusion is that the power of the short term performance metrics overwhelms common sense, and the only antidote to this long term poison is to build a culture that genuinely sees customers as central to the reason for the business existing, and only by serving customers can commercial sustainability be achieved. This commitment to long term customer value needs to be a part of the culture, as fundamental to an organisations shape and actions as DNA.

 

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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2 Responses to It must be in the cultural DNA.

  1. Pingback: Real Success – next episode taster « Viral Leadership TV

  2. rickyabache says:

    Allen,

    You are truly ‘right on’ with this. I read Thomas Freidman’s new book, “Hot, flat and crowded” http://www.thomaslfriedman.com/bookshelf/hot-flat-and-crowded over the New Year break and he makes the same points very well around targets which have a sustainability aspect to them vs. IBGYBG (http://www.doubletongued.org/index.php/citations/ibgybg_1/).

    Fred Kofman in Conscious Business also talks about “success beyond success”.

    Metrics / target-setting as a driver of unsustainable behaviour is an important area of leadership and I intend to discuss this topic of ‘real success’ in a future episode of viral leadership TV – http://viralleadership.wordpress.com/

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